ARLINGTON, VA –  Food Marketing Institute (FMI) submitted a statement for the record to the U.S. House of Representatives Committee on Ways and Means hearing on Increasing U.S. Competitiveness and Preventing American Jobs from Moving Overseas: How Border Adjustment and Other Policies Will Boost Jobs, Investment, and Growth in the U.S. The nation’s food wholesale and retail industry employs more than 4.8 million people nationally, and helps support nearly 3 million additional jobs in supplier industries.

The economy has an enormous amount to gain from Congress’ efforts to reform the tax code in a way that lowers effective rates for all industries and creates a level playing field that does not advantage one business sector over another. FMI is confident that these efforts will not only create a more profitable industry, but will have enormous positive impacts on job creation and consumer spending.

Although the industry is generally supportive of efforts to move to a territorial system, there is no room for border adjustments in tax reform and the approach should not be considered. The type of border adjustment being discussed would inevitably lead to higher consumer prices. In an industry that operates on such a narrow profit margin anyway, grocers do not have the ability to absorb cost increases.

Border adjustment is, even under a best case scenario, a gamble. The wager, unfortunately, is a bigger tax bill for many food retailers and/or higher prices for consumers. There is no reason to make this bet; tax reform can and should proceed without a border adjustment.